IBM’s Acquisition of Canadian-founded Red Hat One of the Largest Ever

Open source software company Red Hat is being acquired by IBM for $34 billion USD. Depending on who you ask, it is either the second or third-largest tech acquisition of all time.

Red Hat was co-founded in 1993 by Canadian entrepreneur Bob Young, who built the business with co-founder Marc Ewing from Raleigh, North Carolina. The platform provides open source software solutions, delivering Linux, hybrid cloud, container, and Kubernetes technologies. According to ZDNet, Red Hat was the first billion-dollar pure play open source company.

The company underwent an IPO in August 1999, the same year Young stepped down as CEO. He would resign as chairman by 2002 and as director by 2005, according to the Globe and Mail.

“Red Hat’s board of directors fired me in 2000 and that’s why Red Hat is so successful today,” Young told ZDNet in a 2014 interview. “I had the skills for a startup. I didn’t have the skills to grow Red Hat from 400 to 9,000 employees.” Since then, Young has gone on to found self-publishing site Lulu.com and is currently owner of the Hamilton Tiger-Cats.

IBM and Red Hat’s partnership has spanned 20 years, with IBM serving as an early supporter of Linux. The tech giant has collaborated with Red Hat to develop and grow enterprise-grade Linux, and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers. IBM said these creations have become core technologies within IBM’s $19 billion hybrid cloud business.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM chairman, president, and CEO of Red Hat. “IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.

IBM said it would continue to build Red Hat partnerships, including those with cloud providers like Amazon Web Services, Microsoft Azure, Google Cloud, and Alibaba, in addition to the IBM Cloud.

“Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, president and CEO of Red Hat.

“Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience – all while preserving our unique culture and unwavering commitment to open source innovation.”

Roger Stringer spends most of his time solving problems for people, and otherwise occupying himself with being a dad, cooking, speaking, learning, writing, reading, and the overall pursuit of life. He lives in Penticton, British Columbia, Canada